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What To Do When Your Health Insurance Company Denies Your Claim!

Updated on April 7, 2011

When Your Medical Insurance Won't Pay!

Almost everyone, without exception, has experienced the denial of a claim for a medical bill by their health insurance company. What can you do? Pay the bill yourself? Panic? No! When your insurance company refuses to pay, you go after the money! You pay your insurance premiums. You expect the company to honor its contract with you and pay their portion of your bills. If at first they deny your claims, you convince them to pay, one way or another. Either you fight the denial yourself or you enlist the aid of someone else to help you. But first you need to find out why your claims were denied.

Know Your Policy And Your Coverage!

1. Know Your Medical Insurance Benefits and What Services Are Covered!

When you receive that little booklet known as your Benefits Manual, read it from cover to cover. If there is any part that you do not understand, ask for an explanation, either from the insurance company, your broker or in the case of employer provided health insurance, your benefits adviser. Legitimate denials will occur if you receive treatment for something that is not covered.For example, you go to a chiropractor for treatment. The chiropractor bills your insurance company and the claim is denied. The denial that is sent to you (you must be notified of denials and the reason for denials must be explained) states that chiropractic care is not a benefit of your policy. Sure enough, you do some research and on page three of your benefits manual, it states in black and white, chiropractic care is not covered. You cannot fight this one. It is simply not covered under your policy.

The example above illustrates the importance of reading the manual and knowing your benefits.

2. Know If Your Insurance Policy Requires Authorization For Treatment or If You Are Required To Use Only Certain Providers of Service!

The second most important thing you must know is whether or not you require authorization for anything out of the ordinary. For example, you see your doctor and he says you need a CT scan or an MRI. He gives you a slip of paper with the name, address and phone number of where you should go to have the test performed. You go, have the test and then you receive a denial from your insurance company stating that the claim will not be paid because you did not receive prior authorization for the service. Again, on page 2 of your little booklet, you notice that for anything other than services from your primary care doctor, you will require authorization. While your doctor should be aware of your policy, he may have hndreds of patients and cannot possible know the ins and outs of everyone's insurance. It is ultimately your responsibility to say, "Has this been authorized by my insurance company?"

While this type of denial can be fought and overturned, if you have prior understanding about any authorization requirements, you won't have to fight with the insurance company to pay this claim. Most times you can win this fight, but a little reading will save you the time you will need to invest to secure payment.

Sometimes, health insurance policies require that you use providers from what they call a list of 'in network providers'. If your doctor sends you to someone who is NOT on the list, your claim will be denied or grossly underpaid, leaving you responsible for payment. Again, this is a fight you can win, but knowing in advance saves you time and effort. While a CT scan will only set you back about $1500.00, using the wrong hospital or surgeon can cost you many thousands of dollars and the higher the cost of the service, the more difficult the fight will become. If you are not insurance savvy, I predict you will lose the fight for the high priced items. You may even need to enlist and pay for the services of a patient advocate to fight for you.

If your health insurance policy requires the use of 'in network providers', the list will include any specialists, labs, hospitals, testing facilities, urgent care centers as well as pharmacies. Be careful to use only the approved list. There is one exception to this rule. If you are in need of a medically necessary service and there are no 'in network providers' for the service, your insurance company will have to refer you 'out of network', but they must be the ones to decide where you will go or who you will use. Do not make the decision for them or the claim will be denied and that is a battle you will lose in almost all cases!

There is a type of denial that happens in the case of some hospital claims. Pharmacy departments and labs, even X-ray departments in certain hospitals are leased to companies that are not a part of the hospital. They may or may not be an 'in network provider' and may decide to bill you separately for services provided to you during your stay. You are not responsible for the bills! As long as the hospital itself is a network provider, that lab or pharmacy or X-ray department MUST accept whatever payment the insurance company offers. They may not bill you!

If You Know Your Policy and Your Claim Is Still Denied!

If you are still having trouble with a denied claim even after knowing the terms of your policy and complying with those terms, there is something wrong.

  • Billing Errors (Simple Paperwork Mistakes) Are Responsible For Most Claim Denials

Simple mistakes made when filling out a claim form are often the most obvious reason a claim is denied. An incorrect ID number, an incorrect provider number, use of the wrong form, timely filing(no excuse for this one), etc. Sometimes the billing error is caused by incorrect coding. For example: For every diagnosis, there is a corresponding number that matches the diagnosis. That is the first thing to look at. If the diagnosis code is wrong, then the procedure may not match up. For example, if your claim form is coded as headache, 784.0, and you were given a foot X-ray, the two will not match up and the claim will usually deny. The example may seem ridiculous, but it happens often. Conversely, there is a code number for every procedure or test given to a patient. That code number may be wrong. Check those simple things first. Your doctor's office is the best place to investigate simple billing errors.

The denials for this type of error can be relayed by your insurance company saying the following: this is not a benefit, coverage for this procedure is not contained in your policy, lack of medical necessity. While the diagnosis and procedure codes are universal, each insurance company has its own denial codes. Your doctor, in most cases, is responsible for appealing your denied claims. Work with the doctor's office to make sure that any billing errors are corrected and that a corrected claim is billed within the correct time frame. Make sure they don't just stuff your denial into a drawer somewhere.

  • Lack of Authorization, No Medical Necessity or Not A Covered Benefit

Insurance companies do not like to pay for anything that is not medically necessary. For example, a facelift is not usually a benefit of health insurance policies. If you have a facelift, your insurance company will deny it in almost all cases, even if your boyfriend, the Congressman, calls in to complain (imagine my surprise when I took a call from a Congressman screaming that his girlfriend really needed the facelift, so to him, it was necessary!). If your policy requires prior authorization and you have an authorization number, that number must be on your bills. The number will be attached to the facility used, the procedure involved and even the doctors performing the service. If the number (usually 11 to 13 digits) is entered onto the claim form incorrectly, even one digit wrong, the claim will deny. That is the easiest to correct. The office simply makes the correction and resubmits the bill.

If no authorization was ever obtained, life is not over. These claim denials can be overturned if you and your doctor request a review and ask for retroactive authorization based on medical necessity. All pertinent medical information must be submitted and reviewed. There are levels to these reviews and the reviews can be elevated all the way up the ladder to the medical director of the insurance company.

There is also another way out of financial responsibility for these denials. If you are a member of an HMO or even a PPO, your doctor and hospital have signed a contract with your insurance company as a registered provider. Every one of those contracts states that they must get prior authorization for your services. Their contracts state that if they don't obtain authorization, they eat the bill. They are, quite simply, not allowed to bill you for the services. Most of them will initially bill you anyway. They know that you have received a denial from your insurance company and they rely on the fact that you will want to pay the bill to protect your credit. Do not fall for it! Your insurance company will let you know if they are allowed to bill you. Call them and find out! Never, never, never pay the bill without asking your insurance company to help first! They will even call the offending doctor or hospital and instruct them to stop.

I have seen countless hospital bills, many times the billed amounts more than a few hundred thousand dollars in each case, denied for authorization. The error was made by the hospitals and doctors involved and the patient was NOT responsible for the bill in any of the cases.

How To File An Appeal!

There are many reasons for claim denials. The denials can almost always be appealed. How do you file an appeal? The first question is obviously: When do I file an appeal? Some insurance companies have restrictions or time limits between the intial denial and the filing of an appeal. While these time limits are not really set in stone, file an appeal as soon as possible. Call your insurance company immediately! Write down the date, time, phone number you called, the customer rep's name and a brief synopsis or summary of the phone call. Always ask for a reference number or case number. Many times, that number is the only way you can prove that you made contact within a reasonable amount of time. Be polite. Ask what you need to do to get the bill paid. Many times the rep will tell you that the doctor will or already has filed an appeal. If not, ask the rep to outline the steps you need to take. If the rep is not interested in helping you, politely ask to speak to a supervisor. I am warning you---do not take out your anger on the customer service rep. That employee can make your life a living hell! Be firm, but be kind. Just as you have things that happen in your life that cause stress, the customer service rep does, too. Understand that and you will find that they want to help you as much as they can. Some of the more senior reps even have the power to overturn a denial themselves, which means that your work can end with the first phone call.

If you have made the initial call, you may find that it is necessary to send a letter, with any additional information required. Get the address of where to send the letter. The appeals department usually has their own dedicated address. Include a copy of your denial and all of the information requested by the carrier. Ask for a review and an adjustment of the denial. Send the letter certified. In the next several days, call back to check progress on the denial.

If you do not receive a satisfactory answer or correct payment of your claim, you have options. If this is a private policy, contact your broker and ask the broker to intervene. If the policy is employee-sponsored, go to your HR department and enlist their help. If none of these things work, most states have some form of insurance monitoring division or Insurance Commissioner. File a written complaint with them. They do investigate and they do take action.

Sometimes, it is beneficial to hire a patient advocate or hire someone else trained to handle insurance denials. Their fees may not be as high as you think they are.

If you find that your insurance company is notorious for claims denials and equally notorious for lack of claims payments, consider prosecuting them for fraud. Above all, consider finding a new insurance carrier.

All Denials Are Different!

To summarize, there are any number of reasons that a medical claim can deny, including those denials because an insurance company simply does not have the funds to pay claims. In that case, they will give you the royal run around and keep you running from now until the end of time.

This article is meant to help with the most common denials. Hopefully, it does provide some assistance!

As a side note: I have written many articles on health insurance and have recently noticed that some of those articles have been reprinted, without permission, without being attributed to me. One of the sites that is guilty of this is a foreign company currently being investigated by their own country for fraud. They are using one of my articles, with my name removed, to entice people to sign up for their services. Please be cautious when seeking assistance with your health insurance problems. Not all companies are above board. If they steal writing, imagine what they will do with your money!


Submit a Comment

  • Cari Jean profile image

    Cari Jean 

    5 years ago from Bismarck, ND

    I am a customer service rep for an insurance company and the scenarios you described above make up a majority of the calls I get everyday. If people knew more about their health insurance plan it would probably save them a lot of time, stress and money and reps like me would get a lot less phone calls! Great Hub!

  • LillyGrillzit profile image

    Lori J Latimer 

    5 years ago from The River Valley, Arkansas

    Dear Jillian, I noticed your Hub, that popped up next to my newest Hub. You have extensive knowledge of how insurance claims are; or are not paid, and excellent ideas. Every Insured person in North America could benefit from this as well.

  • Jillian Barclay profile imageAUTHOR

    Jillian Barclay 

    7 years ago from California, USA

    Dear Sun-Girl

    I hope it is helpful to you. Thank you for reading and commenting.

  • Sun-Girl profile image


    7 years ago from Nigeria

    Nice info.

  • arb profile image


    7 years ago from oregon

    To be loved from far away, life is grand!

  • Jillian Barclay profile imageAUTHOR

    Jillian Barclay 

    7 years ago from California, USA

    Arb, the insurance industry loves you, provided you pay them every month and never submit a bill!

    Thank you for reading and commenting!

  • arb profile image


    7 years ago from oregon

    Jillian! Great hub. Insightful and packed with wonderful info. And I thought the Ins industry cared about me! Reminds me of first love and being dumped and left to lick my wounds. Be well!


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